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11.5 Thus I observe that the Id AO has correctly taken the view that TDS is required to be deducted on payments made to various parties/service providers for ILJC charges as the same constitutes fees for technical services u/s 194J of the IT. Act. Therefore Ground No. 12 to 15 stand dismissed.

11.6 However, before me during appellate proceedings, the Id AR has taken the alternative plea (Ground No. 5) that the in the case of operators to whom payments towards IDC charges have been made, TDS has not been deducted as the deductees income were exempted from TDS. Vide submission dated 12.03.2015, the AR has filed copies of tax exemption certificate issued u/s 197 of the Act is favour of Bharti Airtel Ltd., M/s BSNL, M/s Reliance Infocom Ltd. & M/s Idea Cellular Ltd. In the case of Hutchison Essar (to whom payment of Rs. 12,06,69,183/- has been made), Tata Communication (to whom payment of Rs. 44,10,85,189A has been made) and Reliance Communication (to whom payment of Rs. 15,62,20;843/- has been made) no evidence is brought on record to prove that TDS has been deducted or the exemption u/s 197 is ITA Nos. 3328 to 3332/Del./2015 & SA Nos.315 to 319/Del./2015 17 not available hence the payments made on account of IUC charges for these service providers would be subject to TDS u/s 194J. For non deduction of TDS u/s 194J in the case of payment of IUC charges to Reliance Communication, Hutchison Essar and Tata Communication, the appellant will be considered assessee in default u/s 201(1) of the Act.

Jaipur (decision dated 11.07.2017 in DB ITA 205/2005). The decisions of Mumbai Tribunal, Kolkata Tribunal and Patna Tribunal are also in favour of the assessee. Thus demand for non-deduction of TDS on IUC under Section 194J is not proper. This Tribunal in case of Bharat Sanchar Nigam Ltd., vs. Addl. CIT, New Delhi, in ITA No. 920/Del./2017 decision dated 25.10.2017 {"the BSNL Tribunal case") has also held that Section 194J is not attracted to the IUC payments and that there is no liability to deduct tax. Thus, the issue be decided in favour of the Appellant and appeal be allowed.

4. The Appellant assessee has taken alternative plea (Ground No.5 ) before Ld.CIT(A) that in the case of operators to whom payments towards IUC charges have been made, TDS has not been deducted as the Deductees income were exempted from TDS by following the ratios decided in Hindustan Coca Cola Beverage (P) Ltd. 293 ITR 226 (SC). However, the appellant assessee could not submit any evidence to prove that TDS has been deducted or the exemption u/s 197 of I.T. Act 1961 is not available hence the payments made on account of IUC charges for these service providers would be subject to TDS u/s 194J. For non deduction of TDS u/s 194J in the case of payment of IUC charges to Reliance Communication, Hutchison Essar and Tata Communication, the appellant will be considered assessee in default u/s 201( 1) of I.T. Act 1961. The AO at Para 5.2 of his order dated 30.03.2011 for financial year 2006-07 u/s 201(1)r.w.s. 201(1A) of IT Act 1961 has held that the appellant assessee did not produce any No TDS certificate u/s 197 of IT Act and also did not produce a certificate and prove that deductee-assessee had in fact paid TDS on behalf of said appellant assessee and as such CBDT Circular No. 8/2009 has not been followed and the stands taken by Ld. AO and supported by Ld. CIT (A) on the issues of section 194J of I.T. Act 1961 hold good & legally valid & factually consistent /reasonable against appellant assessee.

"Section 9 , read with sections 194J and 195, of the Income-tax Act, 1961, read with article 12 of Model OECD Convention - Income - Deemed to accrue or arise in India (Royalties and Fees for technical services) - Assessment years 2008-09 to 2011- 2012 - Assessee, as part of its International Long Distance (ILD) Telecom Services business, was responsible for providing services to its subscribers in respect of calls originated/terminated outside India - For provisions of ILD services, assessee was required to obtain services of Foreign Telecom Operators (FTOs) - ILD Operators were in turn billed by FTOs in form of Inter-connected Usage Charges(IUC) - There was no manual or human intervention during process of transportation of calls between two networks - This was done automatically, with human intervention being required only for installation of network which could not be said to be for inter-connection of a call - Assessee merely delivered calls that originated on its network to inter connection locations of FTO and FTO carried and terminated calls on its network - Whether thus payment of IUC by assessee to FTO in connection with its ILD telecom service business ITA Nos. 3328 to 3332/Del./2015 & SA Nos.315 to 319/Del./2015 39 was neither FTS under section 9(1)(vii), nor royalty/process royalty under section 9(1)(vi) - Held, yes - Whether ever retrospective amendment in domestic legislation does not affect royalty definition under DTAA, hence retrospective insertion of Explanations 5 & 6 to section 9(1)(vi) also could not have altered this position - Held, yes [Paras 33, 44, 55, 56& 72][In favour of assessee] Section 9 of the Income-tax Act, 1961, read with section 5 and article 7 of Model OECD Convention - Income - Deemed to accrue or arise in India (Business Profits) - Assessment years 2008-09 to 2011- 2012 -Assessee made payment of Inter-connected Usage Charges(IUC) to Foreign Telecom Operators (FTOs) in connection with its ILD telecom service business - Payment in question did not accrue or arise to 'FTOs' in India - Entire business operations were carried out outside India by FTOs - FTOs also did not have any Permanent Establishment in India - Whether thus no income could be deemed to accrue or arise to FTO's in India and hence under article 7 also income could not be brought to tax in India - Held, yes - Whether further in absence of permanent establishment of FTOs in India, payment of 'IUC' to FTOs could not be deemed to accrue or arise in India under any of clause of section 9(1) read with section 5(2) - Held, yes [Paras 74 & 78][In favour of assessee]"